In 2012 the United Nations celebrates the International Year of Cooperatives. As important partners for the International Fund for Agricultural Development (IFAD), cooperatives are helping to improve the lives of millions of smallholder farmers and their families. On the occasion of the International Year, Tom Anyonge and Monica Romano , who are leading IFAD’s work with cooperatives, offer a background brief on the organizations of rural people:

What opportunities do cooperatives offer to poor rural people?IFAD has been supporting formal and informal rural organizations, which include cooperatives, for many years. And still, as the Rural Poverty Report 2011 highlights, there is a continued need to strengthen the collective capabilities of rural people for several reasons. They give people confidence, security and power – all valuable attributes in overcoming poverty. Worldwide cooperatives provide 100 million jobs. They enable small-scale producers to access market opportunities and information, and services such as technologies, credit and training. Cooperatives facilitate small producers’ participation in decision making at all levels. Cooperatives support secure land-use rights and help negotiate better terms for engagement in contract farming as well as better prices for agricultural inputs such as seeds, fertilizer and equipment. They also represent a powerful means of supporting marginalized groups, such as youth and women. The Smallholder and Community Services Development Project in Kenya or the tea cooperative in Rwanda are good examples of how members are empowered economically and socially, creating sustainable rural employment through business models that are more resilient to economic and environmental shocks.

Why are cooperatives important for IFAD’s work and what opportunities does the thematic year offer IFAD?One of IFAD’s objectives is to facilitate poor rural people’s access to services and build their capacity to influence the policies and institutions that affect their lives. Cooperatives are an important vehicle to reach these objectives. This is why we place a lot of emphasis on rural agricultural cooperatives and will continue to enhance our work with them.

The International Year of Cooperatives is a good opportunity to promote engagement with cooperatives and strengthen smallholder farmers on a larger scale. Together with the Rome-based United Nations agencies, the Food and Agriculture Organization (FAO) and the World Food Programme (WFP), IFAD will act as a driving force during the year to raise awareness of the potential role of agricultural cooperatives in increasing benefit streams to rural women and men. In addition, we will support the strengthening of existing networks and assist policy makers to create enabling environments that allow agricultural cooperatives to evolve.

How do you think the International Year of Cooperatives will change the way United Nations agencies and International Non-Governmental Organisations (INGOs) see cooperatives in planning their programmes?The International Year of Cooperatives raises awareness about the central role that rural organizations, and cooperatives in particular, play in reducing poverty and increasing food security, hence putting this topic on the top of the planning agenda of both policy makers and development practitioners. In partnership with our sister organizations in Rome, we work to reinforce the commitment of United Nations agencies, development organizations and INGOs to put farmers and peoples’ cooperatives in the centre of their planning processes and programmes.

Cooperatives are owned and controlled by their members. Is this bottom-up structure a challenge to effective decision making? In our work with rural cooperatives we have experienced that they actually represent the views and interests of poor rural people far more effectively than any outside party. However, it is also true that effective, transparent and accountable decision-making processes can be a challenge for them. These processes require full ownership by the members – the poor rural people themselves – including pragmatic leadership and sound management. We work to build the capacity of cooperatives so that they become effective and sustainable and represent the needs of poor rural people.

From Mylene Kherallah of IFAD's Policy and Technical Advisory Division:

“Oh no, not again” was my first reaction when asked to lead the preparation and write-up of IFAD’s new Private Sector Development Strategy. I had already been through that experience in 2005 for the old strategy, and it was not exactly a pleasant memory.

The purpose of the strategy was clear enough: to help create new markets and opportunities for poor rural people by deepening IFAD’s engagement with the private sector. And it was not the writing that I minded. It was trying to obtain the consensus across the house through the various committees and getting the approval from the Executive Board that was the most daunting task.

Having to go through endless revisions, and incorporating comments that often contradicted each other, was an agonizing process – especially since the word “private sector” was interpreted differently by various people involved.

But how can you say “no” when a senior manager asks you to do something? So, building on my previous experience, I decided that the best way to handle this was to (a) take it one step at a time; (b) seek help and lots of it; and (c) use this occasion to improve my ability to listen, tolerate different views and develop my sense of humour under duress. Not sure I succeeded in applying point (c) at all times, but at least I tried.

Despite my apprehensions, I have to say that it was not as painful as I thought it would be. Despite a contentious informal seminar, a pre-feasibility study that was conducted in an extremely rushed timeframe, and a failed, long-winded attempt to circumvent official procurement procedures for the study (shame on me), the strategy was approved at its first submission to the EB in December 2011. My worst fear was that they would ask us to revise and come back again at another EB meeting, which is what happened for the previous strategy. But not this time!

In retrospect, I think several things made it work:

enough lead time – we started work early in January 2011 and therefore had enough time to “take it one step at a time” between organizing a Policy Reference Group, writing various drafts and PowerPoints, getting feedback, seeking consensus in-house and obtaining the various approvals;

a Policy Reference Group made up of a diverse mix of committed IFAD staff, which really made it happen – aside from the technical and strategic guidance, it was a fantastic moral support group;

communication and consultations with other staff and external stakeholders, which improved our knowledge in this area; and

the Senior Manager’s (Kevin Cleaver’s, in this case) constant guidance and support, quick responsiveness and his great sense of humour, which helped keep everything in perspective.

The M&E workshop in preparation of the Final Report for the IFAD/EU Food Facility Programme in West Africa closed today.

Over the two days of the workshop, discussions and energy levels were at their best. It was a real pleasure to facilitate a workshop of this type with such a motivated group.

The day began by the participants giving feedback on the data collection tools developed the previous day. Each team was asked to review the questionnaire and personalise it to fit the needs of the country and context. The precisions brought to the document were mainly concerning some thinking about the partners and stakeholders involved in the implementation of the Food Facility. We also reviewed some semantics one again, as the questionnaire needs to be as clear as possible and a stand- alone document for someone who has not participated in the Ouagadougou workshop where the document was conceived.

The floor was then given to ICRISAT who presented their qualitative data collection questions to the rest of the group. The ICRISAT questions necessarily needed to differ from those of the country components as the institutional arrangements for the ICRISAT grant are somewhat different.

In any case, for both the country components and ICRISAT, the questions are centered around the following themes:

- Relevance of the programme and its similarities to other food security programmes

- Farmer assessment of the trainings/knowledge and support received

- Sustainability and probability of scaling up interventions/services once the project is closed

After agreeing on the questions, the participants with the guidance of the M&E Consultant, Task Manager and Head Agronomist for the EU FF, drafted an action plan including an implementation schedule going up until the discussion and endorsement of the final report to be submitted to the EU which will take place in Abidjan at the end of March 2012.

The first step in the action plan is to recruit a local consultant by component to alleviate project teams in the collection of the qualitative data set that was agreed upon for the EU FF.

At the end of the workshop, the particpats expressed their enthusiasm regarding the methodology and approach used to tackle the preparation of the final report to the EU Food Facility. All participants recognised the lack of qualitative data in many of the reports produced and appreciate the innovative approach towards producing a final report which truly incorporates impact.

As many pointed out though, it would have been very useful to have this workshop well before January 2012. The report writing team and participants are in any case motivated and ready to achieve objectives set forth during the workshop and translated into the challenging action plan.

Participatory M&E workshop towards the preparation of the Final Report on the EU Food Facility in West Africa

by Adriane Del Torto

Today, we opened the two day workhop on M&E for the EU Food Facility. Present at the worksessions were the M&E specialits and Production specialits from Benin, Mali, Senegal, Ghana and ICRISAT. The meetings took place in Ouagadougou, Burkina Faso at 'Eau Vive" a local NGO on 26 and 27 January 2012.

The objective of the meeting is to take stock of the efforts already made in M&E at the project level and to come up with an action plan to enable to collect qualitative data for the final report to the EU. The idea of a participatory M&E workshop came from some brainstorming between myself and some CPMs and the M&E consultant who is part of the team producing the final report as a solution to the lack of time for a mission visiting all components of the Food Facility in less than one month.

The first day of the workshop was mainly to discuss results achieved and activities which did not take place and why. Then the group went through all of the EU indicators and discussed the relevance of many of those requested by the programme. In many cases, it was pointed out that baseline data was missing and that it would be difficult to report on all of the indicators in both the Logframe and the EU table. Each indicator was discussed and put into context to ensure proper understanding of the mechianisms.

Thi step was not planned on the original agenda, however, when considering the complexity of the programme, made of 7 distinct grant agreements, it became quite relevant to discuss requirements in order to have a somewhat harmonious report.

One we had agreed on the quantitative indicators, the rest of the day was dedicated to the qualitative ones. Adding a qualitative dimension to the final report of the EU FF was suggested to the EU during my last mission in Brussels in December 2011. My proposal was very much appreciated by the Programme Manager at the EU, who is very much looking forward to reading our results.

The lead M&E consultant and the group identified a series of themes and specific questions to ask programme stakeholders in order to collect the qualitative type data sought. These were accompanied by a list of information sources and data verification documents.

This first day, was a bit long, however, the output was quite positive. The debates between participants were lively and engaging and the colleagues present were strongly motivated by others' comments and questions. Let's hope the ambiance at its best tomorrow as well.

As popular discontent swept across much of the Arab world over the past year, some observers were puzzled. “How is it,” asked the World Bank’s World Development Report 2011, “that countries in the Middle East and North Africa could face explosions of popular grievances despite, in some cases, sustained high growth and improvement in social indicators?”

Last week, experts from IFAD and the International Food Policy Research Institute (IFPRI) took a stab at answering that question in a panel discussion at IFAD headquarters in Rome. Their observations were based on early results from a three-year research project, co-funded by IFAD and IFPRI, examining the nexus of rural development, food security and conflict.

The study’s initial phase covers 24 “Arab-plus” nations, comprising all the members of the Arab League plus Iran and Turkey. The panellists emphasized that it is a work in progress and said the presentation was, in part, an opportunity to solicit feedback from colleagues who brought their own expertise to the table.

Those caveats aside, the researchers’ preliminary conclusions were provocative. While conditions vary from country to country, they said, indicators of well-being in the region are not as positive as official figures suggest. What’s more, Arab nations may be exceptionally vulnerable to conflicts associated with food insecurity and poverty.

A proxy for poverty
Given the severe rates of youth unemployment and rising commodity prices in many Arab states, there’s little doubt that economic grievances triggered at least some of the unrest they’ve experienced. Yet the official statistics issued by governments show a steady decline in poverty amidst economic growth.

At the panel discussion, IFPRI research analyst Perrihan Al-Riffai presented evidence that the government data may be flawed and incomplete. To set an accurate baseline for analysis, she explained, the IFPRI researchers have selected a proxy for official poverty figures. Rather than income, they’re looking at the rate of stunting among children under five – because stunting is a clear marker for vulnerability and food insecurity at the household level.

“The nutritional indicator is more comprehensive than the poverty indicator,” said Al-Riffai. “It really paints a different picture. When we plot the nutrition-growth relationship, we find that the Arab-plus countries are not doing as well as the rest of the world in reducing poverty through economic growth.”

This analysis matters, Al-Riffai and other panellists argued, because reliable data provide the only sound basis for evidence-based budget and policy decisions that will reduce poverty and promote stability.

Risk of food insecurity
The figures on child stunting also shed new light on food insecurity in the Arab world. Based on the proportion of revenues that each country spends to import food, the researchers found that the risk of food insecurity ranges from “low” to “serious” across the region. When the child-nutrition data are factored in, however, the risk shifts toward “alarming.”

Three countries in the Horn of Africa – Sudan, Somalia and Yemen – are among those registering the highest risk. And the rural poor are the most vulnerable population overall.

As IFPRI senior researcher Clemens Breisinger pointed out, investments in agriculture usually reduce poverty more cost-effectively than any other form of development. Yet smallholder farming has not thrived in the Arab-plus countries. In fact, farming is no longer the main source of income for the region’s poorest rural households, who now earn more than 80 per cent of their income from non-agricultural activities.

“Agriculture is globally the most pro-poor sector, but not in the Arab world,” said IFPRI senior researcher Clemens Breisinger. “There are some serious issues of growth not reaching the poor.”

In general, said Maystadt, periods of political transition heighten the risk of violence between groups within a society, and recent events around the Middle East and North Africa surely seem to verify that point. More broadly, he said, the Arab world faces an ongoing risk of conflict stemming from myriad factors. These include weak institutions and a demographic ”youth bubble,” as well as dependency on oil exports for foreign exchange.

In some places – such as Somalia, the subject of a case study by the research team – climate change also fosters conflict by depriving rural populations of their traditional livelihoods.

But in many Arab countries, the disconnect between overall economic growth and persistent rural poverty may be the most inflammatory factor of all. “Rising food prices increase food insecurity,” said Maystadt, “and this increases the risk of conflict.”

Basis for investments
These finding suggest that a broad-based approach to food security, focused not only on agricultural development but also on stimulating the wider rural economy, could mitigate the risk of future conflicts in Arab nations. More study is needed to determine which policies will have the greatest impact.

To that end, the IFAD-IFPRI project team will supplement its initial research with visits to IFAD programmes and interviews in the field. In addition, the team will use its newly developed Atlas for Rural Development and Conflict, a comprehensive digital database, for further analysis and modelling. Their on-going work will concentrate mainly on Egypt, Gaza and the West Bank, Iraq, Jordan, Lebanon, Somalia, Sudan, Syria, Tunisia and Yemen.

Ultimately, the goal of the research project is more practical than academic. “It will give us a more quantified and empirical basis for our investments,” said IFAD Country Programme Manager Omer Zafar. Over time, informed by solid research, those investments should make a real difference in rural lives across the Arab world.

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When is an equity investment fund more than just a money machine? When it focuses on development rather than quick riches.

That’s exactly what a unique IFAD project has been doing in Armenia since 2009, with investments in the country’s food-processing sector designed to expand markets and improve the economic prospects of smallholder farmers. Known as the Fund for Rural Economic Development in Armenia (FREDA), the initiative combines elements of both development assistance and banking.

“If you want to do a serious job of rural poverty reduction, you have to use new, innovative methods of finance and development,” said Dr. Ruotsi. To that end, he explained, FREDA invests in “engines of rural development” – including dairy, canning, wine-making, and fish and poultry processing companies.

IFAD and the Government of Armenia established FREDA in January 2009, with additional funding from the Government of Denmark. At the same time, a twinning arrangement was set up with the Danish equity firm IFU to build the fund’s capacity. Operations commenced the following September.

Dr. Ruotsi said the FREDA concept arose out of a lack of agricultural lending after the financial crisis of 2008. Banks were demanding extremely high collateral for loans, and small- and medium-sized rural enterprises urgently needed an alternative source of financing and leverage. In Armenia’s transitional economy, where agriculture is mostly smallholder-based, IFAD and its partners stepped in to test the equity investment model.

Today, FREDA has a portfolio comprising nearly $3 million invested in seven agro-producers, with another eight in the pipeline.

Financial and technical support

Unlike most equity funds, which concentrate only on achieving high financial returns, FREDA targets companies that are strategically placed within the food value chain. Because these businesses must procure high-quality crops and other supplies from local smallholders, their success or failure directly affects the well-being of poor rural households. So FREDA bases each investment decision on both the firm’s business plan and its projected contribution to local economic development.

Dr. Khanikyan, the FREDA chief, noted that the fund provides financing for new technology and equipment, as well as working capital, to the companies in which it invests. What’s more, he said, FREDA provides them with non-financial support to strengthen business systems and management practices.

This technical support includes an independent valuation of each company prior to investment, plus help with marketing, accounting and management practices. Crucially, FREDA also ensures the producers’ compliance with international food safety standards, a prerequisite for expanding their export markets.

Armenia and beyond

“We’ve found that these are very efficient investments,” said Dr. Khanikyan – and indeed, he and Dr. Ruotsi presented some impressive results. A FREDA-invested winery has increased its production capacity by 500 per cent since 2009, for example, while a fish factory with equity funding has multiplied its exports by a factor or 10.

“Equity investment is a logical extension of the kind of work that IFAD does in many countries,” said IFAD Country Programme Manager Henning Pedersen, who moderated the presentation and was a key figure in FREDA’s launch. “This is just one instrument that is appropriate in certain circumstances,” he added.

So far, it seems to be an effective instrument in Armenia. If FREDA meets current targets for 2015, it will have investments in 30 food-processing enterprises providing market outlets for thousands of the country’s smallholder farmers.

The next logical question is whether the equity investment model can be replicated in other transitional and developing countries. Armenia’s experience suggests that it may well be worth a try.

About IFAD

The International Fund for Agricultural Development (IFAD) invests in rural people, empowering them to reduce poverty, increase food security, improve nutrition and strengthen resilience. Since 1978, we have provided grants and low-interest loans to programmes and projects that have reached several hundred million people. IFAD is an international financial institution and a specialized United Nations agency based in Rome – the UN’s food and agriculture hub.

Disclaimer

The opinions expressed in this blog are those of the authors and do not necessarily represent those of the International Fund for Agricultural Development (IFAD). The designations employed and the presentation of material in this blog do not imply the expression of any opinion whatsoever on the part of IFAD concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. The designations “developed” and “developing” countries are intended for statistical convenience and do not necessarily express a judgement about the stage reached by a particular country or area in the development process.